I am proud of our accomplishments and how we have worked together, to move our state forward. We have shown leadership. We have been innovative.

As I said in my State of the State speech one year ago, ``The people of Connecticut, and history, will judge us by whether we accepted our stewardship simply to preserve the comfortable status quo or whether we seized it with boldness of purpose.''

We did seize it with boldness of purpose, and we must do so again, for many challenges still confront us.

Our successes however are no cause for complacency. Our work is not yet complete. Our vision has not yet been fulfilled.

The state of our state, I am proud to say, is strong _ but there is much we can do to make it stronger yet.

First and foremost, we must address the issue of jobs and economic development.

Two years ago, we ranked near the bottom in job creation nationally. We have worked hard in the last 18 months and we have created 24,600 new jobs.

That's real progress, substantive progress, but we want to be at the top of the list creating quality jobs for our workers.

I believe that every hardworking person in our state who is searching but cannot find a quality job is one person too many.

I believe that every hardworking person who receives a pink slip, whether it's from Stop Shop or Electric Boat or U.S. Repeating Arms or any other business, is one person too many.

I believe that our economy is not about statistics or rankings or percentages. It's about people _ people who want to raise their families in security and with dignity.

It is for these people and their families that we must do better. And we will do better.

Our state is blessed with a wealth of resources: a skilled work force; excellent schools, a prime location; and companies that are world leaders in technology and innovation.

We have led and will continue to lead in economic prosperity, but only if we better utilize our resources and better respond to a constantly changing economy.

We need to make sure that our companies stay here and expand here, and we need to let companies all over the world know that Connecticut is the perfect place to do business.

Let there be no doubt, our core mission this session is a straightforward and critical one: to stimulate economic growth, retain good jobs, create new and even better jobs.

Our mission begins anew today and my budget serves as a blueprint for that mission. We know what needs to be done _ now we must show the will and the leadership to get it done.

First, I am calling for a major reorganization of how state government aids in economic development.

Right now there exists a complicated maze of economic development procedures, programs and policies.

Under my budget, the many alphabet soup agencies will be reshaped and re-energized with a new command focus.

It will contain a new office of national and international commerce, a new CT Research Institute and a strong planning unit to coordinate housing and transportation.

Also, our multiple financing authorities will be streamlined into a new CT Finance Collaborative, providing a coordinated approach to those seeking state assistance.

Further, as Connecticut's CEO, I will personally take charge of building our economic future and will work closely with our employers and our state agencies. I will also appoint a new Director of Economic Development who will be housed in my office and who will report directly to me.

Make no mistake about it: reorganizing is not enough. Businesses in the state and those considering moving here need to know that our corporate tax structure is both fair and consistent. Therefore, today I am calling for the early elimination of the surcharge on the corporate income tax.

We also need to encourage companies to take risks and to expand in Connecticut rather than elsewhere. My budget provides for two new important tax credit programs.

The first is the Job Creation Tax Credit. A company that creates 50 or more new jobs will be eligible for a tax credit based on the withholding tax paid by the new employees. This provides an incentive to create jobs and ties it to a new source of revenue for the state.

The other is the Displaced Worker Tax Credit. A company will be able to take a credit against their corporate tax for hiring laid-off workers who lost their jobs through no fault of their own. These skilled workers deserve our best efforts to help them find new, well paying jobs right here in Connecticut.

My budget includes several other initiatives that will help increase our competitiveness.

These include:

_ One and a half million dollars for the 21st Century Jobs Program to customize job training

_ $250,000 for an expansion of the Connecticut Apprenticeship program

_ and $3 million for a new loan forgiveness program to encourage college students to choose work in ``high needs'' fields. Half of this money will be made available to students who plan on becoming math or science teachers, one of our true shortage areas.

I am also proposing that all legislation carry an economic impact statement so that legislators and the administration know full well how their proposals will affect jobs and our economy.

The estate tax increase passed last session contained an anomaly commonly referred to as a cliff. Under the law, the estate of a Connecticut resident who dies with an estate of $1.99 million owes no tax _ but one who dies with the estate of $2,000,001 owes $99,600. This obvious inequity diminishes confidence in our tax system, drives residents out of state and discourages others from moving here in the first place.

I am seeking an immediate elimination of the so-called cliffs and a doubling of the amount of an estate that is exempt from the tax. I am also proposing that the estate tax be phased out completely.

And I am recommending tax relief for energy costs. Not since the energy crisis days of the 1970s has America seen such a jump in oil, gas and other energy prices. To help consumers, I am proposing a 25 percent across-the-board cut in the state's public utilities tax. This will lower everyone's bills, saving businesses and consumers $45 million a year.

A few months ago I spoke of the boldness of purpose. I believe in that deeply.

I believe that if we are truly to make a difference and if we are truly to be the leaders that our citizens want us to be, we need to be bold in our thinking and in our actions.

So, let me begin our new session, set our new agenda, with what I think is the truly bold: today I am calling for the complete elimination of property taxes paid by individuals on their cars.

Under my plan, beginning this July you will no longer have to write a check for your car taxes. It will be a thing of the past, and the real property tax relief that so many have been talking about for so long will finally become a reality.

Direct property tax relief, with money actually put in the wallets of taxpayers.

This is a bold step to eliminate a regressive tax and to put millions of dollars back in the economy. It is a step which will make Connecticut a much more attractive place to live, while reducing the financial burden on the average working family.

Here's how it would work: each city and town will receive a check from the state for the amount of revenue they would have collected from the car tax. In fact, the check may be for more than they would have collected because we are assuming a 100% collection rate _ and many municipalities generally fall well short of that rate.

And, we will continue to send out the $86 million for tax relief to cities and towns under the Pequot Fund formula, as well as the additional moneys for host towns.

And to pay for this program we're going to do something people thought we had been doing all along. We're going to use the revenue derived from the two casinos to pay for the tax relief.

So the next time someone asks, ``Where did all the money go?,'' they will know exactly where it went and how it was used. It's paying for their car taxes.

How does this work financially?

We will intercept the $435 million we collect each year in casino revenue along with another $61 million in general fund revenue to ensure municipalities will not lose any local revenue. To keep the state budget whole, we have achieved $173 million in savings and we will eliminate the $350 property tax credit that only some taxpayers currently receive.

For those who wonder if this proposal is fair, let me give you a few eye-opening examples:

If you are a Bridgeport resident who owns a 2003 four-door Taurus, you pay $309 in property taxes. In New Canaan, the same car carries a tax of $103 a year. Is that fair? No.

If you are a Norwich resident with a 2002 four-door Toyota Camry, your annual tax bill is $292. In Lyme, the annual tax bill is less than half _ $138.

One last example: A taxpayer in Greenwich pays $273 in property taxes for a 2005 four-door Mercedes-Benz Sedan. A Waterbury taxpayer pays $278 in property taxes for a 2000 Chevrolet Cavalier.

Forget about equalized tax rates. Let's get rid of the tax altogether.

And the savings begin this July.

How often is it that we are able to take a tax completely off the books? They often seem to get passed into law easily enough. But eliminated?

I ask you to stand with me on this historic proposal and to provide immediate, direct, real property tax relief to the citizens of Connecticut.

They deserve it. And they deserve it now.

While jobs and the economy must be our central focus this year, other issues need to be addressed as well.

Double-digit energy rate increases are stretching family budgets this winter. The cost of oil, natural gas, and electricity is rising far faster than the ability of consumers to pay.

Long-term, permanent solutions to our energy problems will not be found in state houses like ours but rather at the national and international level. However, there are steps we can take to help.

I am calling for the creation of a new Department of Energy to bring a new vision and a new emphasis to meeting the state's energy needs for the 21st century.

This Department will develop a statewide energy policy, promote energy efficiency and new technologies, and participate in rate proceedings.

I am also calling for the addition of two new voices to ratemaking decisions: a consumer advocate and a business advocate. Families and business owners are the ones paying the bills; they should have a voice in how these bills are set.

In addition, I am asking regulators, as they set rates, to take into consideration the ability of consumers to pay higher costs. It seems reasonable. It seems logical. Let's make it the law.

I am also proposing a delay, from April 15 to May 31, in the shut-off date for this year for utility customers running behind on their bills.

A few years ago Connecticut's state government was itself running behind in paying its bills. We had to deplete the rainy day fund, lay off employees, cut expenses and finance our debt. They were difficult times.

Now, because we have largely held spending in check, we have a sizable budget surplus. It is a surplus that should not be viewed as a license to spend, but rather as a means to get our fiscal house more in order.

I am committed to retiring state debt and increasing our rainy day fund.

To that end, I am dedicating $85.5 million of the surplus to pre-funding two outstanding debt payments.

Further, I am proposing that $335 million of the surplus be deposited into the state's rainy day fund. This represents the largest single deposit ever made and will provide us with a highest-ever balance of $940 million. It is our fiscal responsibility to take this action, and I am proud to recommend it.

It is also our responsibility to offer responsive services to our citizens. My budget contains funding to hire new DMV employees at the busiest branches in order to reduce waiting times. In addition, services will be expanded at the Winsted, Putnam, Willimantic and Stamford branches by one additional day per week.

We're also continuing our work in the area of transportation. Last year, we focused on the transportation system's most pressing needs. This year we turn our focus to new strategic investments.

As part of my budget initiative, I am proposing to build on last year's progress by adding another $344 million in additional transportation improvements.

My commitment includes:

_ Commuter rail service between New Haven, Hartford and Springfield

_ $50 million for a New Britain busway

_ Rail station and parking improvements on the New Haven Line and Shore Line East

_ Facility and service improvements on all lines

_ and Rehabilitation of 40 locomotive coaches.

No investments will pay greater dividends than those we make on behalf of our children. My budget serves to meet the needs of Connecticut's children in several ways.

Considerable new funding is being proposed again this year for DCF _ an increase of $24 million for new and expanded programs. This funding is necessary to help protect our most vulnerable children _ those who are abused or neglected.

And I am pleased to announce that my budget contains funding for a long overdue self-contained, secure, state-run facility for juvenile justice girls.

These children deserve our love and our attention. They deserve effective programming and responsive services. They deserve it _ and it is our moral responsibility to provide it.

By 2012, almost half of the state's new jobs will require post-high school training. Unfortunately, even with Connecticut's statewide academic success, there are still significant achievement gaps _ gaps that must be eliminated.

I strongly believe that quality early childhood education will help children born in poverty emerge from economic disadvantage to become vibrant and dynamic workers in tomorrow's economy.

That is why my proposed budget will:

_ Increase the number of inner city children in preschool by 500

_ Increase School Readiness funding

_ and finance preschool programs for five more communities.

I am also committed to alternative school options such as magnet and charter schools. In fact, approximately 20,000 children, many of them from disadvantaged backgrounds, will attend these schools next year.

For charter schools, I am recommending $1.7 million for the expansion of seats for those schools that have natural grade growth. For our Education Cost Sharing grant, I maintain our commitment from last year and note that my budget includes direct educational grants to cities and towns of $2.026 billion. This represents an increase of $142 million in direct educational aid in just the last two fiscal years.

Our educational system is second to none. But the needs of our children extend far beyond the walls of our classrooms. In recent months there has been a troubling increase, particularly in our urban areas, in the number of shootings and other acts of violence involving young people.

Our children are killing each other _ often with little remorse, too often with little regard for the legal or moral consequences. What is leading our children to turn to violence at such a young age and with such a desperate sense of vengeance?

And the violence in our cities is not limited to the young. Next week I will be meeting with the mayors of many of our cities to discuss the escalation of violence and to see how we can work together to ensure the public's safety. There will be other meetings, but we must take action now.

Therefore my budget includes funding for:

_ Three new prosecutors and three new inspectors in the Chief State's Attorney Office to investigate and prosecute violent crime in our cities

_ $520,000 for the State Police to create a state and municipal task force to combat violent crime in our major cities. A team of state troopers and two officers from the major cities will focus on ``hot spots'' of crime.

_ $4.25 million for direct grants to municipalities to prevent violent criminal activity.

Yes, our challenges this session are many, but I know that we will meet our challenges by working together, by being bold and by putting people, not politics first.

The people of Connecticut expect that we will work together, that we will make the best use of our resources and that we will come up with the best solutions to the problems of the day.

We have come such a long way over the past year _ but our journey is not yet over.

As your governor, I will never settle for less than what I know to be this state's limitless potential. My administration will continue to set the highest of goals _ and I promise to work with you to reach these goals.